FILE PHOTO: Shoppers look around at goods in a shop in Tokyo, Japan October 1, 2019. REUTERS/Kim Kyung-Hoon
TOKYO (Reuters) – Core consumer prices in Tokyo, a leading indicator of nationwide inflation, rose 0.5% in October from a year earlier, data showed on Tuesday, staying distant from the Bank of Japan’s elusive 2% target and keeping it under pressure to ramp up stimulus.
The data offered the first clue on how a sales tax hike that kicked off in October could affect price growth, which remains subdued despite years of heavy money printing by the Bank of Japan.
The rise in the core consumer price index (CPI) in the Japanese capital, which includes oil products but excludes fresh food prices, was slower than a median market estimate for a 0.7 percent gain.
Japan’s government proceeded with a twice-delayed increase in the sales tax rate to 10% from 8% in October as part of efforts to rein in the country’s huge public debt.
In forecasts made in July, the BOJ expects nationwide core consumer inflation to hit 1.0% in the current fiscal year ending in March 2020, including the effect of the higher tax.
The central bank is likely to trim the inflation forecast at a rate review on Thursday. But it is leaning toward keeping monetary policy steady as stable markets, a truce in U.S.-China trade talks and robust domestic demand give it room to save its dwindling ammunition, sources have told Reuters.
Reporting by Leika Kihara; Editing by Shri Navaratnam